International trade and international trade disputes were a predominant focus of President Trump and his trade officials throughout 2018. Thompson Hine’s Trump and Trade team has prepared a slide presentation to provide our readers with a broad overview of the most significant trade actions taken by the Trump administration last year. From the renegotiation of the North America Free Trade Agreement (NAFTA), which is now the U.S.-Mexico-Canada Agreement (USMCA), to the many ongoing trade actions involving imports of steel, aluminum and products from China, it was a busy year. This overview concisely presents details and the current status of the president’s primary trade activities.

The presentation includes information on the current status of President Trump’s major trade actions, including NAFTA/USMCA negotiations, the U.S.-Korea Free Trade Agreement, and other bilateral trade negotiations with Japan, the European Union and the United Kingdom. It also provides details on major trade and tariff actions occurring in 2018, such as the Section 232 steel/aluminum tariffs, the Section 232 automobile and automobile parts investigation, and the Section 301 China-related tariffs.

We invite you to stay abreast of continuing developments in 2019 via our blog, TrumpandTrade.com. To receive an email notification whenever a new post is published, please subscribe to the blog.

On December 21, 2018, the U.S. Trade Representative (USTR) submitted to Congress and released to the public a summary of the Trump administration’s specific negotiating objectives for its U.S.-Japan Free Trade Agreement negotiations. This follows the USTR’s notification to Congress on October 16, 2018, of the Trump administration’s intention to enter into negotiations (see Trump and Trade Update dated October 17, 2018 and Update dated October 26, 2018), the submission of public comments – over 150 total – concerning negotiating objectives for any trade agreement with Japan, and a December 10, 2018 USTR hearing at which more than 40 witnesses testified on negotiating objectives.

The USTR has stated that its aim in the negotiations is to address both tariff and non-tariff barriers and to achieve fairer, more balanced trade. The summary notes that the United States and Japan are “the world’s first and third largest economies, respectively, representing about 30 percent of global Gross Domestic Product.” While Japan is an important market for U.S. exporters, the USTR notes, the market is “still too often underperforming” and “exporters in key sectors such as automobiles, agriculture, and services have been challenged by multiple tariff and non-tariff barriers for decades, leading to chronic U.S. trade imbalances with Japan.” The summary document consists of brief bullet point objectives for such issues as Trade in Goods; Customs, Trade Facilitation, and Rules of Origin; Technical Barriers to Trade; Trade in Services; Intellectual Property; Labor; Environment; Trade Remedies; Dispute Settlement; and other trade-related areas of focus for the negotiations.

In releasing the negotiating objectives, the USTR stated that it may “seek to pursue negotiations with Japan in stages, as appropriate, but we will only do so based on consultations with Congress.” It also noted that these negotiating objectives will be updated in the future and that the Trump administration is committed to working closely and transparently with Congress. Formal negotiations with Japan may commence in late January 2019.

On December 1, 2018, President Donald Trump announced his intention to formally terminate the North American Free Trade Agreement (NAFTA) in 2019. Addressing the press aboard Air Force One, Trump stated that he will terminate the agreement within six months in an effort to get the U.S. Congress to move on implementing the United States-Mexico-Canada Agreement (USMCA): “And so Congress will have a choice of the USMCA or pre-NAFTA, which worked very well.” In accordance with NAFTA Article 2205, “A party may withdraw from this Agreement six months after it provides written notice of withdrawal to the other Parties.” While the president can announce his intention to withdraw from the agreement and even deliver written notice of termination, it remains open for debate if congressional approval is required for complete termination to take effect.

These comments set the stage for a showdown with congressional leaders on the passage of the USMCA and whether it can be done within the president’s desired timeline. Senator Ron Wyden, the ranking member of the Senate Finance Committee, issued a statement shortly after the USMCA was signed on November 30, 2019 indicating that he still has some concerns about the negotiated USMCA: “Over the coming months I will push to see that these concerns are addressed before Congress considers this proposal.” To implement the USMCA, a majority in each chamber of Congress is required to pass the law; as a result of the mid-term congressional elections in November, Trump will need bipartisan support to obtain that majority.

On the sidelines of the international G-20 (Group of Twenty) forum in Buenos Aires, Argentina, U.S. President Donald Trump, Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto signed today the new United States-Mexico-Canada Agreement (USMCA), launching the formal process to replace the North American Free Trade Agreement (NAFTA). During the signing ceremony, Trump stated, “This new agreement will ensure a future of prosperity and innovation for Mexico, Canada and the United States.”

Today’s ceremony is a significant milestone for Trump, who focused on the modernization of the NAFTA in his presidential campaign, and follows an intense period of negotiations completed in September 2018 (see Trump and Trade Update, October 2, 2018). The signing ceremony also occurred on Nieto’s final day in office and despite the parties’ continuing disagreement over the Section 232 tariffs the United States has placed on steel and aluminum imports from Canada and Mexico. In brief remarks, Trudeau raised the need to remove these tariffs, stating that “With hard work, good will and determination, I’m confident we will get there,” and adding that “Our shared interests, prosperity and security demand it.”

While the USMCA has now been signed, the trade agreement must still be ratified by Congress. Trump notified Congress on August 31, 2018 of his intent to sign the agreement, and this notification triggered certain procedures under the Trade Promotion Authority (TPA) (formally known as the Trade Preferences Extension Act of 2015). Now that the USMCA is signed, the Trump administration has 60 days under TPA to report to Congress changes to U.S. law that are required to comply with the terms of the agreement. Also, within 105 days of the agreement being signed, the U.S. International Trade Commission (ITC) must complete a study of the agreement’s economic impact (see Trump and Trade Update, October 16, 2018 and ITC Notice of Investigation). Eventually, the Congress will have to pass legislation to implement the USMCA, a final step in the implementation process which may have become more difficult with the Democratic Party assuming control of the House of Representatives in the next session of Congress in January 2019. While Trump expressed confidence today that the USMCA will pass Congress in the new year, bilateral opposition in both houses of Congress is mounting, which may lead to more side letters on certain issues or concessions on other unrelated legislation. The legislatures in Mexico and Canada must also ratify the trade agreement, but approval in both without much pushback is expected. Most trade analysts are predicting that the terms of the agreement may not truly be finalized and implemented until well into 2019.

U.S. Customs and Border Protection (CBP) issued a significant ruling in September that distinguished between North American Free Trade Agreement (NAFTA) country-of-origin marking rules and the country-of-origin rules applying to products subject to Section 301 tariffs and trade remedy duties. In its ruling, CBP determined that Chinese-origin components imported into Mexico for assembly into an electric motor satisfied the requirements for marking the assembled product as a product of Mexico in accordance with the NAFTA Marking Rules; however, it ruled that the Chinese-origin components were not “substantially transformed” in Mexico and that the assembled final product remained a product of China subject to the U.S. government’s Section 301 retaliatory tariffs on imports of Chinese electric motors and to any potential trade remedy duty. CBP’s determination requires importers to understand thoroughly their supply chains, including the manufacturing processes of their suppliers and the origin of components used in those manufacturing processes.

On October 16, 2018, the U.S. Trade Representative (USTR) notified Congress of the Trump administration’s plans to enter into free trade agreement negotiations with the United Kingdom (UK) after the UK has exited the European Union. (See Trump and Trade Update dated October 17, 2018.) The USTR is seeking to remove both tariff and non-tariff barriers and to achieve free, fair, and reciprocal trade. To further develop its negotiating objectives, USTR has requested public comments on such an agreement, including U.S. interests and priorities.

The USTR is specifically seeking comments on these issues:

General and product-specific negotiating objectives for the proposed agreement.

Relevant barriers to trade in goods and services between the United States and the UK that should be addressed in the negotiations.

The economic costs and benefits for U.S. producers and consumers of the removal or reduction of tariffs and removal or reduction of non-tariff barriers on articles traded with the UK.

Treatment of specific goods (described by U.S. Harmonized Tariff Schedule numbers) under the proposed agreement, including comments on: (i) product-specific import or export interests or barriers; (ii) experience with particular measures that should be addressed in the negotiations; and (iii) ways to address export priorities and import sensitivities in the context of the proposed agreement.

Customs and trade facilitation issues that should be addressed in the negotiations.

Sanitary and phytosanitary measures and technical barriers to trade that should be addressed in the negotiations.

Other measures or practices that undermine fair market opportunities for U.S. businesses, workers, farmers and ranchers that should be addressed in the negotiations.

Written comments addressing USTR’s negotiating objectives must be submitted no later than January 15, 2019. USTR’s Trade Policy Staff Committee will hold a public hearing on these negotiating objectives on January 29, 2019; any request to appear and testify must be submitted by January 15, 2019. Requests to testify and written comments must be filed through the Federal eRulemaking Portal at https://www.regulations.gov on Docket No. USTR-2018-0036.

On October 16, 2018, the U.S. Trade Representative (USTR) notified Congress of the Trump administration’s plans to enter into free trade agreement negotiations with the European Union (EU). (See Trump and Trade Update dated October 17, 2018.) The USTR is seeking to remove both tariff and non-tariff barriers and to achieve fairer, more balanced trade. To further develop its negotiating objectives, USTR has requested public comments on such an agreement, including U.S. interests and priorities.

The USTR is specifically seeking comments on these issues:

General and product-specific negotiating objectives for the proposed agreement.

Relevant barriers to trade in goods and services between the United States and the EU that should be addressed in the negotiations.

The economic costs and benefits for U.S. producers and consumers of the removal or reduction of tariffs and removal or reduction of non-tariff barriers on articles traded with the EU.

Treatment of specific goods (described by U.S. Harmonized Tariff Schedule numbers) under the proposed agreement, including comments on: (i) product-specific import or export interests or barriers; (ii) experience with particular measures that should be addressed in the negotiations; and (iii) ways to address export priorities and import sensitivities in the context of the proposed agreement.

Customs and trade facilitation issues that should be addressed in the negotiations.

Sanitary and phytosanitary measures and technical barriers to trade that should be addressed in the negotiations.

Other measures or practices that undermine fair market opportunities for U.S. businesses, workers, farmers and ranchers that should be addressed in the negotiations.

Written comments addressing USTR’s negotiating objectives must be submitted no later than December 10, 2018. USTR’s Trade Policy Staff Committee will hold a public hearing on these negotiating objectives on December 14, 2018; any request to appear and testify must be submitted by November 26. Requests to testify and written comments must be filed through the Federal eRulemaking Portal at https://www.regulations.gov on Docket No. USTR-2018-0035.

The U.S. International Trade Commission (ITC) is seeking public comment concerning the probable economic impact of duty-free treatment for currently dutiable imports from Japan. The investigation, U.S.-Japan Trade Agreement: Advice on the Probable Economic Effect of Providing Duty-free Treatment for Currently Dutiable Imports, was requested by the U.S. Trade Representative (USTR) Robert Lighthizer in a letter received October 26, 2018. For additional background on this trade agreement and USTR’s separate request for public comments, see Trump and Trade Updates of October 17, 2018 and October 26, 2018.

The ITC will provide a report advising the USTR on the probable economic effect of providing duty-free treatment for imports of currently dutiable products from Japan on U.S. industries producing like or directly competitive products and on consumers. The USTR asked that the ITC’s analysis consider each article in chapters 1 through 97 of the Harmonized Tariff Schedule of the United States (HTS) for which U.S. tariffs will remain, taking into account implementation of U.S. commitments in the World Trade Organization. The advice will be based on the HTS in effect during 2018 and trade data for the year 2017. In addition, the ITC report will assess the probable economic effects of eliminating tariffs on imports from Japan of certain agricultural products on U.S. industries producing the products concerned and on the U.S. economy as a whole. The ITC expects to submit its report, which will be confidential, to the USTR by January 24, 2019.

The ITC is seeking input for the investigation from all interested parties under Investigation Nos. TA-131-043 and TPA-105-004. The key deadlines for the investigation are:

November 26, 2018: Deadline for filing requests to appear at the public hearing

November 30, 2018: Deadline for filing prehearing briefs and statements

On October 16, 2018, the United States Trade Representative (USTR) notified Congress of the Trump administration’s intention to enter into negotiations with Japan for a U.S.-Japan Trade Agreement. (See Trump and Trade Update dated October 17, 2018.) USTR has stated that its aim in the negotiations is to address both tariff and non-tariff barriers and to achieve fairer, more balanced trade. As a result, and in order to develop negotiating objectives, USTR is seeking public comments on such a proposed agreement, including U.S. interests and priorities.

In particular, USTR is seeking comments on the following issues:

General and product-specific negotiating objectives for the proposed agreement.

Relevant barriers to trade in goods and services between the United States and Japan that should be addressed in the negotiations.

Economic costs and benefits to U.S. producers and consumers of removal or reduction of tariffs and removal or reduction of non-tariff barriers on articles traded with Japan.

Treatment of specific goods (described by HTSUS numbers) under the proposed agreement, including comments on: (i) product-specific import or export interests or barriers; (ii) experience with particular measures that should be addressed in the negotiations; and (iii) ways to address export priorities and import sensitivities in the context of the proposed agreement.

Customs and trade facilitation issues that should be addressed in the negotiations.

Sanitary and phytosanitary measures and technical barriers to trade that should be addressed in the negotiations.

Other measures or practices that undermine fair market opportunities for U.S. businesses, workers, farmers and ranchers that should be addressed in the negotiations.

Written comments addressing USTR’s negotiating objectives must be submitted no later than November 26, 2018. USTR’s Trade Policy Staff Committee will hold a public hearing on these negotiating objective on December 10, 2018; any request to appear and testify must also be submitted by November 26. Requests to testify and written comments must be filed through the Federal eRulemaking Portal at https://www.regulations.gov on Docket No. USTR-2018-0034.

The Office of the U.S. Trade Representative (USTR) announced that the United States is set to launch separate free trade agreement (FTA) negotiations with Japan, the European Union and the United Kingdom. In letters sent to Congress on October 16, 2018, Ambassador Robert Lighthizer wrote: “We are committed to concluding these negotiations with timely and substantive results for U.S. consumers, businesses, farmers, ranchers, and workers, consistent with U.S. priorities and the negotiating objectives established by Congress in statute.”

By issuing these formal letters to Congress, the USTR is following procedures required by the Congressional Trade Priorities and Accountability Act of 2015, commonly referred to as Trade Promotion Authority (TPA). The announcement allows negotiations to formally begin with Japan and the European Union after a 90-day period. The letter announcing the negotiations with the United Kingdom accounts for its upcoming exit from the European Union and signals that talks will begin after that is completed in late March 2019.

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Trump and Trade is a resource for businesses of all sizes that need timely information to successfully navigate the global economy. Our team closely monitors the international trade activities of the Trump administration, and we update this blog frequently to provide concise, client-focused summaries of critical trade-related news and developments.

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